Copper hits seven-week high on stimulus hopes and soft help from the dollar

LONDON — Copper prices climbed to their highest in more than seven weeks on Tuesday, boosted by growing expectations of monetary stimulus and a weaker dollar, but worries about demand in top consumer China are expected to limit gains.

Traders said copper was taking its cue from equity markets and oil, which have bounced after clocking up large losses in the aftermath of the British vote to leave the European Union.

Talk the US Federal Reserve will delay interest rate rises until December are weighing on the US currency, which when it falls makes dollar- denominated commodities cheaper for non- US firms, which boosts demand. The possibility of monetary policy easing in Britain and in China have also helped sentiment.

“There was some chatter about a potential interest rate cut in China, which hasn’t materialized yet,” said Julius Baer analyst Carsten Menke. “But overall, industrial metals markets are very nervous because the overall backdrop is bearish.”

Benchmark copper on the London Metal Exchange ended up 2.3% at $4,818 a ton. Earlier on Tuesday, it touched $4,830, its highest since May 5.

Copper’s break through the 200day moving average at $4,786 could fuel further gains, one trader said, adding that the 21-day moving average at $1,595 would support threemonth aluminum prices.

Aluminum gained 1.7% to close at $1,624 a ton.

Morgan Stanley expects demand growth of 3.6% this year combined with supply discipline will mean the aluminum market has a small surplus of 34,000 tons this year. The bank sees aluminum prices averaging $1,543 in 2016.

“However, as price strength would probably activate supply growth in this competitive market, upside to spot appears capped for now,” Morgan Stanley analysts said.

China is the world’s largest producer of aluminum.

Zinc was up 4% to $2,075 a ton. It has gained 27% this year on expectations of tighter markets due to mine closures.

“However, upside potential is limited by the risk of mine restarts,” Morgan Stanley analysts said, adding that with zinc prices above $2,000 a ton, “the majority of global zinc mines are profitable”.

Lead rose 1.9% to $1,735, tin added 0.5% to $16,900 and nickel climbed 4% to $9,340 a ton. Nickel earlier rose to $9,345 a ton, its highest since May 5. —